How is government expenditure classified in the budget?
There are two different sets of classifications used – Plan vs Non-plan and Capital vs Revenue expenditure: Capital Expenditure: expenditure used to create assets or to reduce liabilities e.g. building a road. Revenue Expenditure: expenditure not used to create assets e.g. expenses on salaries or other administrative costs. Plan Expenditure: expenditure on schemes and projects covered by the five-year Plans. Such plans are developed by the Planning Commission after consulting individual ministries. Each Plan specifies programmes that ministries will fund and develop over the next five years (such as the Mid-day Meal scheme and the Sarva Shiksha Abhiyan). The current Plan is the eleventh, and runs from 2007 to 2012. Plan expenditure can have both revenue and capital components. For instance, under the Pradhan Mantri Gram Sadak Yojana, administrative costs could be classified as revenue expenditure, while expenditure on the actual infrastructure might be classified as capital expenditure
